Here is a great illustration of the US debt from a respondant on Kunstler's blog: ------------------------------------------------------------------------

Barstiat | October 25, 2011 4:02 AM | Reply

Here is why S&P downgraded the US credit rating.

• U.S. Tax revenue: $2,170,000,000,000

• Fed budget: $3,820,000,000,000

• New debt: $ 1,650,000,000,000

• National debt: $14,271,000,000,000

• Recent budget cut: $ 38,500,000,000

Now let’s remove 8 zeros and pretend it’s a household budget.

• Annual family income: $21,700

• Money the family spent: $38,200

• New debt on the credit card: $16,500

• Outstanding balance on the credit card: $142,710

• Total budget cuts: $385

"I wish it were possible to obtain a single amendment to our Constitution - taking from the federal government their power of borrowing." -Thomas Jefferson, 1798

"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes... Money has no motherland; financiers are without patriotism and without decency; their sole object is gain." -Napoleon Bonaparte, 1815

------------------------------------------------------------------------PS: This doesn't include all the Fannie Mae and Freddie Mac mortgages guaranteed by the Federal Government, nor the unfunded liabilities such as Medicare, nor Social Security, nor any state or municipal debt such as California or Harrisburg, PA.

PPS: If you have not read Kunstler's book, The Long Emergency, you should do so.

PPPS: If you have not read Griffin's book, The Creature from Jekyll Island : A Second Look at the Federal Reserve, you should do so.

"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes... Money has no motherland; financiers are without patriotism and without decency; their sole object is gain." -Napoleon Bonaparte, 1815

yes, but according to GAAP when the US credit rating on those unfunded liabilities drops from AA+ to D the blow out on the credit spread will reduce the market value of the liability and thus it becomes REVENUE. WHOO WHOO.

The key to understand RobotTrader is to understand that he is representative of all the low-level functionaries that were bounced out of financial jobs and became `traders'. They all read the same stuff, call the same 900 numbers, etc. To invest and profit from these people, the best thing is to buy leap puts on whatever they are buying, then sit back and collect. Working like clockwork! Who can forget RT's endless pumping of Netflix. Now obliterated.

Let's imagine Ben's thought process if, as is looking likely, the Euro banking system starts to collapse later this week, and contagion spreads to Wall St.

"Well", he thinks to himself "I guess I could print some cash to bail out JPM, Goldman, Citi, BAC etc. etc. and stop them going bust before the weekend, but I'm really worried about Joe six-pack and the pump price of his Gas, so I'd better not."

I don't think it is unlikely at all. As Europe struggles in it's death throes the money there will seek a home. There aren't many places big enough to absorb that cash that fast. The only exception is going to be the US.

The bump here is likely to be temporary until the fleeing rats figure out that we are just as fucked as Europe. The the money will go to the last place that is left - real stuff. And all that money flooding into such limited real assets is going to make prices go exponential.

So as a trade - US right now is probably a good bet, but certainly not long term. A broke countries paper is never a good place to store wealth.

With mobs of people outside shup-up banks up and down the country throwing rocks at the windows and demanding to get their money back, it would be a brave foreign investor that was, at the same time, clamoring to get their money into the US banking system.

I guess there maybe flows into US Treasuries, if people could figure out how to buy them when the primary dealers's staff were all busy carrying their possessions out of the building in cardboard boxes.

yes; the global run on money markets in Sept 08 was basically hours away from total bank lockage. CP markets locked up, interbank locked, everything locked. The Fed had to step in to guarantee the function of these markets with unlimited credit. They still are in that position as far as I'm concerned.

If it happens again, the CBs will step in to provide cash. Expect that. They won't do anything else and that is basically supposed to be their core function.

I am looking at "By the end of the year" and "Comex implosion" as answers to those two questions, but I give only 75% confidence in them. Could be later, and it could be through position limits or through the opening of a clean futures exchange in Asia.

If i were the Chinese why the hell would i want to have real price discovery until ive bought all i want?

The Chinese are still marching in lock step with their co-conspirators in the West when it comes to margin hikes, so your conclusion is supported by the evidence. When that cooperation stops, it's game over.

Definitely true, that is why I assign that scenario a fairly low probability.

The likely trigger for the Chinese pulling the plug would be riots in their major cities (or even the countryside). They will wind up pulling the plug in order to hold on to power. Otherwise, you are right, they would keep doing it infdefinitely, or until they had the vast majority of the gold as well as the silver production capacity.

The Chinese buy all their own domestic production. It will take about ten years to back their currency minus what they buy internationally. They don't want to pull the trigger any time soon. In a meltdown where the world goes back to a gold standard they get nuked.

Not really. Industry is their saving grace. The form of the monetary system isn't important so long as you have a productive industrial society (and your government doesn't steal all the net benefit from foreign sales by printing the national currency).

Of course, if their industral base were to collapse, perhaps due to the machinations of their idiotic government, then all bets are off. Their actions are nonsensical, so it is hard to predict what they will do in a given situation. Perhaps that is the way they want it. Otherwise, they are as they appear on the surface--idiots giving away the productive capacity of their nation for literally nothing (trading it for US paper that they never call).

another soon to be failed prediction I'll be reminding you about. You've been bleating about this imminent COMEX implosion for a year now, yet you remain totally impervious to education about what COMEX does.

US Silver Eagles sold over 36 Million so far this year to set a new record. Here is an interesting link where you can review the present and past years sales by the month. In 1998 when Silver was $4.50, 4 million sold.

Hmmm... So, that is the explanation for the US being the worlds largest debtor nation?... And why avg income in US is shrinking?... And why US deficits are growing larger by the year?... And why ALL western banks are a hair away from implosion?...

Fact is, western central banks are between a rock and a hard place. They use paper manipulation to supress PM prices while rest of world buys the paper and take physical delivery. Dumb move for western CBs... but they gotta make their fiat look as good as possible...which isn't very good!

BTW, I lived/worked in Asia for six years and have a fair idea of what is going on there. China has surpassed S Africa as the worlds largest gold producer. China is not exporting gold. China/Mid East/SE Asia have some very large soverign wealth funds that are under reporting their physical PM stocks.

Western middle class isn't going to buy anything! They are up to their eyeballs in consumer/housing/student debt! Get a clue!

Your points are all true and valid, the large marginal buyer is clearly Asia and the ME, and since marginal demand disproportionately affects price in inelastic markets this "new" demand is blowing open the paper games.

However, the West still purchases huge amounts too, and if they were to stop or cut back in a big way, the strains on the physical market would ease - dramatically so.

Much as i like to think new buyers can fill the void i'm inclined to think otherwise, mainly due to the ridiculous wealth distribution in Asia, the proles dont have the wealth to divest, they barely get by on income.

Sure there are huge whales in Asia, but once they have had there fill of PMs, they would look to other stores namely RE and equities in strategic corporates.

"However, the West still purchases huge amounts too, and if they were to stop or cut back in a big way, the strains on the physical market would ease - dramatically so."

Who, in the west, is buying 'huge amounts' of gold?

"Much as i like to think new buyers can fill the void i'm inclined to think otherwise, mainly due to the ridiculous wealth distribution in Asia, the proles dont have the wealth to divest, they barely get by on income."

Asians have traditionally/historically saved ~ 40% of income. Over generations that adds up to a LOT OF DOUGH... much of it buried under homes, mostly in old silver. Asians leared thousands of years ago to avoid paper...fiat. A lesson the average 'proll' in the US is about to learn the hard way. Asians are producing more millionaires/billionaires per year than any other part of the world...while in the west the productivity gains of the past 30 years have gone to the top percentile... less than one per cent. Most in the West that are wealthy have most likely already diversified into gold...if they have any smarts. The new Asian wealthy are buying gold in quantity... they are literally playing catch up... Just as the Chinese soverign wealth fund is playing catch up with gold reserves. Of course they will not 'have their eggs all in one basket... right now they are buying gold eggs.

Inelastic markets change with economic change. At one time it was 'a fact' that petroleum use in the US was 'inelastic'... now we know it is not because of a declining economy = economic change = decline in petroleum use. If a spate of new currencies will be the norm after the paridigm change that we are now in there is no one that can say what value will be placed on PMs. We only know that over the very long haul that PMs do have a practical value in bread/shelter/trans, etc. We also know that over the long haul PMs are a better store of value than any paper asset.

First, I'm not 'looking for PMs to have a moonshot'... either soon or over the next few years. I have been accumulating over my lifetime and am in no rush to 'get rich quick' or, even slowly. My interest is in wealth preservation and to have something for my children to, hopefully, use wisely.

For PMs to have a moonshot would mean, in reality, that most fiat would take a vertical nose dive. I don't even think in terms of PMs valued in fiat... I don't care how much monopoly money one would offer for my PMs, I would refuse the offer. I don't need anything that fiat can buy that I can't cover with fiat on hand.

What I see happening in Asia is an upward mobility, in fits and starts, of the population. If I think back to my grandmothers farm and doing chores there while still in school I can see that she lived much as a Chinese peasant does today. The entire area of the state around my grandmothers farm languished in depression until LBJ became pres and began to make changes that effected that part of the US economy... (not an LBJ fan). She got an indoor toilet in 1959! Gas stove instead of wood about the same time and I can remember dumping the water drip pan when the ice man delivered a new 25lb block of ice. Not so different from the current Chinese peasant, eh? But, it was a good healthy life. We had fresh eggs, fresh chicken, smoke house with ham/bacon, raised our on beef, big garden with lots of canning for winters, pecan orchard, and a cash crop of rotating corn/cotton/soy. Lots of hunting/fishing. Great life for a kid. We never saw a cop, never heard of a kid being abducted, rape, murder were unknown to us. I even had a bicycle, rusty but trusty. At the time there were many share croppers in the area that had it much worse than we did... they might have been living below the current Chinese peasant for most of them were hungry most of the time and rarely had a dollar in their pocket.

Sorry for the long anecdote but I want you to know what it was like in 1955 in the area of the US where I am from... not so different from today's China.

Now, in the area of my deceased grandmother's farm there stand multi million dollar homes that have decreased in value ~ 35% so far. My dumb cousin bought one with some oil royalty money and it's dropped like a rock.

What I see here in the West is an economy stifled by regs, too much gov, too many stupid laws, too much prison industry, too much gov agency snooping into citizens business, too many bankers/pols running free that should be in jail, too much political haggling, etc

What I see in Asia is a gov that is tyrannical but seem to have the best interests of the COUNTRY at heart. At least they have made it plain to their people that getting wealthy is ok and that they are encouraged to buy PMs. Sure, they are making a boatload of mistakes but what emerging economy facing dollar hegemony does not? They are doing the best they can, their workers want to work and are not afraid of hard work and the people are genuinely proud of what their cournty is accomplishing.

Once I was proud of America, I served in a war. I can't say that anymore and it makes me sad.

About cronyism, nepotism and rule by force... We have plenty of that here as well.

Is the rotation of GS to Treasury to GS not cronyism?

I could tell you of a lot of nepotism that I witnessed while building high speed rail systems... some of it might curl your hair... especially what I saw when working with the council of governments when involved with building Metro Rail. Unbelieveable... and Marion Barry was the mayor! lol

We have more people in jail per capita than any other nation on earth.

I don't 'welcome' the rise of the East but see it as unavoidable. As Lord Acton famously quipped 'once a certain level of bureaucracy exists only drastic measures can dislodge it'...paraphrasing of course. I see the West as bogged down in bureacuracy and we have been on this course for a long time. imo, capitalism died when FDR introduced a lot of social programs to avoid the country turning to outright communism. Of course, the real destruction came before, with the creation of the Fed. Only the markets can determine what interest rates should be. Now everything is manipulated... until it isn't and it all crashes. It might be spectacular.

It's been pleasant sharing some thoughts with you...and, I try to avoid 'labeling' people. I do become irritated when people can't place themselves in the shoes of others... see the another's point of view. The Chinese are simply people with the same needs, dreams, hopes as all people have. My nationalistic fervor went away in Viet Nam...and the Unpatriot Act was the last straw for me.

Yep the PMs have been heading East to the Chinese, Indians, Taiwan and the Russkies for 3 years now. They have all been making steady and fairly large PM purchases

It will continue until the metals are not manipulated any more. The longer they keep jacking with the markets the more likely markets in the East will disconect from the CME scum.

You are witnessing the greatest transfer of wealth from West to East that has ever occured in our lifetimes.

And these dumbfuck bankers only answer is to try to suppress PM prices and only make it easier for the East to buy on the cheap. The western bankers and their PM Cartel are making the biggest mistake they have ever made in their desperation to keep the Ponzi going.

Mark my words, The next time China reports gold reserves it will be shocking.

So, if I understand this correctly, we've allowed China and India to suck up our manufacturing and tech jobs, then they use the money to buy UST until they conclude that they will be worthless, so they start using those treasuries to acquire actual hard assets, i.e., precious metals, resources, AND US property.

Is that about it?

You gotta wonder how the banksters end up in this deal, and how they'll try to screw over those of us who saw fit to transfer what we could into metals.

you're an idiot..."take physical delivery"? WTF, do you think sovereigns buy from fuckin COMEX? They buy from miners or other sovereigns. COMEX has jackshit to do with this. You idiots seem to think every ounce of gold in the world moves through COMEX somehow and that COMEX is on the hook for the trades of its SHORTS.

Here in Germany, the delivery times for silver are getting longer at the various precious metals dealers I patronize. Definitely, some folks are nervous about the Euro (including me, a little old US expat paid in Euros).

Many are waiting for a final smackdown by the big banks to cover their shorts, but may just end up having to buy higher and higher.

I hope the train pulls out the station and all these scared little rabbits on the sidelines, hoping to buy cheaper run and run, and get shredded under the tracks. They are as bad as the big banks and shorts.

I think the big move will be when the Asians dump dollars and Euros....and run to the metals...the survival trade..and its pretty close to that time as I see it...I sure as hell would be doing it,,,oops ...I did already

had been actively trading short, profit taking and being cautious then was just thinking for the day before options expiry, when they are trying to paint an outside reversal day, this is just not going down...was about 30 seconds late but reversed positions and caught about 3 inches of upside....very unusual price action. Makes sense.

Robotrader - only blind people on ZH take you seriously with your "monday morning QB" type tactics. Save us your drivel and your eternal optimism on the fraudulent stock market you obviously have a vested interest in..

What people in the know (insiders) are saying 'privately' about the impending calamity is being publicised by these surges. As the massive flight of Euros from the shunned euroland nations continues to land in Germany, it is reasonable to rush for the exits. We are in DEEP DEEP SHIT, and it is now hitting the fan for real.

Only gold can save you from the grip of Biflation. From here on we'll always be caught between a rock: the danger of recessionary contraction, and a hard place: the specter of massive inflation.

There are no easy answers. As I've been warning, the old playbook no longer applies to the current global economic situation. They have screwed it up royally and the way forward has many and huge risks.

GOld will save your wealth and savings from buying power decimation of anything denominated in dollars (cash, stocks, bonds).

i think starting October 1, the federal reserve has been secretly printing huge amounts of dollars that are being loaned to the ECB and this massive run up in Eur/usd was that cross being executed in the market. it makes sense, because the Euro zone can't print more euro and gold, crude, silver, euro all started ramping at the same time and the dollar got hammered.

If you want to find out what is happening with Silver and Gold I highly recommend that you go here. Read the Turd's posts and then go to the forums and check out some of the content put out by the community there. Good stuff.